HK stocks seen up after U.S. rally, banks in focus

HONG KONG, May 2 (Reuters) - Hong Kong stocks should rise on
Friday, tracking strong gains in U.S. and regional shares, as a
drop in oil prices and a stronger dollar calmed fears about
inflation.

"The market could test the 26,000 resitance level again after
the very strong closing in the U.S. markets," said Louis Wong,
research director at Phillip Securities.

"Interest rate sensitive stocks should be in focus because
after all, the Fed cut rates by a quarter percentage point.
Chinese banking stocks could perform after taking a breather
before the holiday."

The market was closed for Labour Day on Thursday.

The Hong Kong Monetary Authority on Friday lowered the base
rate charged through its overnight discount window by 25 basis
points to 3.50 percent. The central bank's move followed the U.S.
Federal Reserve's decision to cut its benchmark federal funds
rate by a quarter percentage point to 2 percent on Wednesday.

On Wednesday, the benchmark Hang Seng Index .HSI slid 0.61
percent to close at 25,755.35 points.

The China Enterprises Index of Hong Kong-listed mainland
companies .HSCE, or H shares, eased 0.47 percent to end at
14,230.25.

STOCKS TO WATCH:

* HSBC (0005.HK: Quote, Profile, Research, Stock Buzz) (HSBA.L: Quote, Profile, Research, Stock Buzz) aims to launch its first life
insurance joint venture in China in July or August and plans to
offer pension services with a local partnership in the world's
fastest growing major economy, a senior HSBC executive said on
Thursday. [ID:nN01441179]

* Construction firm China State Construction International
Holdings (3311.HK: Quote, Profile, Research, Stock Buzz) proposed that each existing share of HK$0.10
each be subdivided into 4 subdivided shares of HK$0.025 each to
facilitate trading and to broaden its shareholder base. For
details please see
here

* Hong Kong's Wing Lung Bank Ltd (0096.HK: Quote, Profile, Research, Stock Buzz) said its net
interest income for the first quarter of 2008 fell 1.4 percent
year-on-year to HK$360.1 million due to a decline in free fund
contributions under a lower interest rate environment. Its net
fees and commission income rose 2.9 percent to HK$90.9 million
due to growth in the securities broking business. For details
please see
here

FACTORS TO WATCH:
* Nikkei .N225 Japan stocks jump after Wall Street rally [.T]
* U.S. stocks- Wall St rallies on tech, dollar rebound [.N]
* STOCKS NEWS ASIA-Market factors, main events [STXNEWS/ASIA]
* Oil falls on weak US demand, Nigeria, dollar [O/R]
* Dollar- Fed pause views spark broad dollar rally [USD/]
* For upcoming Hong Kong events, click on [HK/DIARY]
* For Hong Kong press digest, click on [PRESS/HK]

KEY HK ADR MOVERS (by % change)

China East Air (CEA.N: Quote, Profile, Research, Stock Buzz)(0670.HK: Quote, Profile, Research, Stock Buzz) +2.9

China Life (LFC.N: Quote, Profile, Research, Stock Buzz)(2628.HK: Quote, Profile, Research, Stock Buzz) +2.6

Semiconductor Mfng (SMI.N: Quote, Profile, Research, Stock Buzz)(0981.HK: Quote, Profile, Research, Stock Buzz) +2.6

China South Air (ZNH.N: Quote, Profile, Research, Stock Buzz)(1055.HK: Quote, Profile, Research, Stock Buzz) +2.6

Hutchison Telecom (HTX.N: Quote, Profile, Research, Stock Buzz)(2332.HK: Quote, Profile, Research, Stock Buzz) +2.3
(US$1=HK$7.8)
(Reporting by Joseph Chaney; Editing by Anne Marie Roantree)